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tv   Squawk on the Street  CNBC  August 31, 2009 9:00am-11:00am EDT

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are up 4%. nasdaq trailed up 2 1/2%. it's a good month for small caps as a russell 2,000 is up by better than 4% for the month of august. dow and s&p, best monthly performance since 2000. now let's talk about those big themes of the day. the chinese stock market was down 7% nearly overnight. in fact, the worst three-day stretch in a long time. the market itself is down about 10% over the past three days. you have commodity stocks, a bit weaker as a result of what we saw over on china. oil stocks, for example, and the metals are weaker over concerns over demand, specifically out of china. then you have this note from dick who is forecasting strong earnings growth. from 2011 to 2015, near term he's looking at some issues there. most recently he put out a note talking about financial stocks running on fumes. i want to talk about morgan stanley. downgrade t at bank of america, knew tra to buy, as they say
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shares are no longer a bargain. big story last week was aig and the huge run-up in shares there. the stock alone in august went from 13 no to near 50. barron's over the weekend saying the stock is over-priced. then fannie and freddie has enjoyed a meteoric rise. fannie up 2% in august. freddie up 280%. fbr says no fupd mentndamental n these companies. stock split which it says is unlikely. let's go to matt nesto at the nasdaq. >> thanks very much. the premarket indicator showing we're going to snap that four-day winning streak, out performance of the nasdaq looks to have hit the wall today. certainly the chinese news is not playing well in the marketplace. look at the corporate news we have out here today, you see intel shares are down on this despite a report from the semi industry association that showed, well, slowing contraction of semiconductor sales for the month of july,
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they were down 18% versus a year to date average annual decline of 25%. look sequentially, month on month, the chip sale number rose 5.3%. intel also. show you j.a. solar, anything with the whiff of china falling here today, except for china sun industry, pushing higher here today. e-trade has been relieved of 120 million share overhang, if you will, from citadel. the larger shareholder said, we're not going to do that. they busted a deal. pacific crest here today and jetblue initiated a buy at steeple. we'll show you the best and worse stock in the nasdaq 100 for the month of august. look at john malone's liberty, up 45%. let's go down to bertha now at the nymex. >> thank you, matt. see that breaking news there, mickey mouse buying spider-man. interesting combination. very interesting markets a far as energy is concerned.
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we did see oil drop on the chinese pullback. also with a bit of strength that we are seeing in the dollar. moderate volume because, in london, we did have the bank holiday today. it's not on huge volumes that we're watching. for the month oil has underperformed the s&p. up 2 1/2% to 4% at the s&p. but it is way up year to date. we main range today, watch a bit of volatility in the heating oil and in the gasoline futures as both those contractss a expire at the close of trade. let's go over to chicago and rick santelli. >> thank you. an hour ago canada released the gdp figures, their economy in the thekd quarter shrank by a more than expected quarter. a lot like u.s., ended up with minus 6 and change from a revised number. hey, we don't have any buybacks until tomorrow. the first of september we'll get a buyback, especially after steve had those great moments with the new york fed governor,
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dudley. of course, monday nany market participants still say that issuing of debt is a monetization. many don't understand why they don't admit it. as far as the market today, it is trying to annticipate both ap and friday's jobs report. jobs are king. mark haines, back to you. >> santelli, thank you. sell-off in asia overnight which is now impacting us. china's shanghai composite led the pack to the downside dropping 6 3/4%. that is a three-month closing low. the month of august, chinese stocks dropped more than 21%. their second biggest monthly loss in 15 years. hong kong's hang seng lost about 2%. japan's nikkei down .4. after jumping more than 200 points earlier in the session.
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guy johnson, things a little rocky in europe? >> yes, to say the least, mark. that china story certainly having a negative impact on most of the european markets. let me tell you as bertha was just saying, london is out today. that is takes a big chunk of volume out of the european markets. it is by far and away the volume leader on our side of the pond. elsewhere across europe, a negative story. let me give you numbers on the month. august obviously very, very positive. quite different in fortune, different for the european market. ftse up around 6 1/2%. bank in frankfurt only up 2% in the month of august. the reason for that, those dramatic drops in the value of volkswagen. the cac up around 9%. and the swiss market up around 10% in the month of august. today we've had cpi data out of the euro zone, down 0.2%. that is much better than expected. the market was looking for down 0.3%. i say much better than expected. the difference is marginal.
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could prove important to the ecb, which is meeting later on this week to decide rates at a time when part of the european economy are beginning to come out of recession. erin, mark, back over to you. >> all right. thank you very much, guy johnson. up next, senor economics reporter, that changed in a hurry shs didn't it? you saw the disney headlines. bob iger will join us live next first on cnbc. >> that's right. you've got the 25% premium from marvel. that's another deal. $4 billion total. disney going out in the market. we'll hear from bob iger in a moment. and steve liesman is working a long day, mark. he did "squawk box" and he is coming on next with his exclusive interview with new york fed president william dudley. otherwise known as bill. then, the word on the street and the buzz beyond the trading floor, will china keep us down? plus, third avenue fund launching the first new fund in five years, diving straight into distress and defaulting
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disney is going to be, well, they're doing a deal this morn for $4 billion. julia boorstin is here this morning with ceo bob iger. julia, take it away. >> thank you for joining us. we appreciate it. >> good morning. >> good morning. so tell us this deal, 5,000
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characters, $4 billion. why does disney best interest to acquire marvel entertainment? >> well, first of all, this is a very, very attractive company for many reasons. one, its sbil intellectual property, over 5,000 characters. rich heritage of characters and stories. great team of talented people, both on the creative and the business side. extremely well-run company. as you know, we've been focused on basically creating great content or buying great content and then using technology to distribute it as broadly as possible and to be as innovative and possible and to also use it to enable us to enter markets all around the world. so it is very, very consistent with our strategic focus, it's a company that we have followed for a while and admire a lot, both for its content and for its people. and we're really excited about this. >> now, disney has a focus on family-friendly entertainment content the whole family can enjoy. also creating content then to distribute across all the
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platforms. obviously the "high school musical" comes to mind. how do you plan to use marvel, what is your strategy for using the content and characters? >> well, we believe in the value of the marvel brand. we intend fully to not only use the marvel brand but to use our distribution and our marketing platforms globally to help grow that brand. we think there are a number of opportunities for marvel stories and marvel characters to actually exist on disney platforms. but we also believe that there's ample room to put a spotlight on that marvel brand. so the intention is not to rebrand marvel disney. in fact, the opposite to emphasize the marvel brand and to use marvel where we can on disney platforms and on disney places to grow both businesses. >> now, what does this mean for the theme park? obviously you bring your characters in different parts of the company throughout the theme parks around the world.
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how are you going to use marvel in the theme park? >> well, marvel characters have already proven to be strong in terms of theme park attraction. and we believe that there are a lot of opportunities around the world, not in every one of our parks because there are some existing agreements that we obviously have to honor. a number of places for us to use the marvel characters to basically help us grow our theme park business into better entertain people. >> mr. iger, it's erin burnett. three quick questions. one from someone who is a father of boyce and they say perhaps this is disney's plan to go after boys. you have the girls' market cornered. is that one way to look at this, you're trying to bring boys into the family? >> we obviously have things for boys, "cars," to "toy story". >> some into princesses, why not. >> princesses and fairies which
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skew more to girls than to boys. this is a great fit for us because we would love to attract more boys and we think clearly that marvel skew is more in the boys' direction. there's an appeal to a lot of their characters and stories. look at the spider-man and "iron man" films which are a recent example of marvel product that was universal in appeal that spans gender and age and geographic territories. this is a great fit but we obviously know that disney has a lot of products that are more girl skewed than boy and we like the opportunity to go after boys more aggressively. >> so my second question. >> by the way, my boys like that, too. >> right. i figured they would. these numbers just coming in from standard & poor's. this is your fourth biggest deal ever since january '06 chen you bought pixar for $8 billion. this is a big deal for disney. does this mean you're going to do this and go away for a while or is this a beginning of a new strategy for you?
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>> this is a really unique opportunity and n. property that not only was attractive but management team that we really are glad to welcome to disney. we take it a step at a time. again, we work opportunityistly, we've got a strong balance sheet. this shouldn't in any way signal this is a wave of acquisition with the company. we look at everything on its own and look at it from a shareholder perspective and strategic perspective. this is the perfect opportunity, right product, right people at the right time. >> bob, this question you probably will scoff at. february 2004 i remember the morning of the top story, comcast bid for disney. it didn't go through. your market cap today is $4 billion, on friday. comcast is out there now. they can get bigger in cable, won a big court victory. no doubt they would be interested in you. you'll probably laugh at it but i want to ask anyway. what about that deal?
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>> well, what happened in 2004 was a long time ago. and circumstances have changed significantly. i think for us, i can't speak for comcast, it's not something that i can really react to other than that was a long time ago and i have no idea what comcast is interested in or up to these days other than the fact they were a really good partner on the distribution side for us. >> it's not clear to me, sir, what more you can do for marvel that marvel hasn't already done. they've got comic books, comic strips, they've done movies, merchandising. what more can you do? >> well, again, we've said a few times this morn that marvel has done a great job of growing itself. but when you look at disney and its global reach, whether it's in television, in film distribution, on the licensing side, on the retail side, online, video games, theme
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parks, we clearly provide them with a platform, both on the distribution front and on the marketing front, that they've had access to but only through third parties. as we discovered with pixar, when you bring a company like pixar or a company like marvel into disney and you're working as one company instead of as two, not only do you eliminate a lot of the friction that is normal in the existence of companies that are not part of the same entity, but you have everybody essentially working to achieve one goal, and that's to grow value. and that's what we see happening here. there's obviously a reach that disney has, both from a brand perspective, from a technology perspective, you name it, that marvel can only achieve by dealing with third parties. and now we're going to be together. we believe that that not only justifies the price, but will grow both companies significantly over time.
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very exciting for us. >> you mentioned the price. you're paying about $50 per share and marvel last traded at $38.65. the stock has regained so much ground over the past year. the stock is way up over the past two years. do you think that -- i mean, is this a good time to buy the company? definitely on the upswing. what's your perspective in terms of the pricing and the timing of the acquisition? >> we obviously thought it was a good time. we are paying roughly a 29% premium. the deal calls for about 40% in stock and 60% in cash. as we looked at marvel, we saw a company that had significant growth potential on its own. and so as we looked ahead, we thought the possibility of marvel increasing value certainly was there, and therefore this was, in effect, a right time for us in that regard. but as we also looked ahead we thought together we could actually make that growth even more compelling.
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and the marvel management team obviously reached the same conclusion. no question, a good price for them, but a good time for us and the right price for us as well. >> and just one last question. i know that marvel has a lot of deals with other studios like spider-man with sony. what is included in this deal and what is not included? >> well, first of all, there's a treasure trove of characters and stories, over 5,000 characters and so many opportunities to mind not only characters that are known but characters that are not well-known as marvel provld when they made "iron man" last year, the beginnings of a great franchise. marvel has entered into a number of deals in the last number of years that they view and we view as very attractive deals with third parties and film and video -- i'm sorry voor, video ,
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to name a few. those deal will stay in place to continue to create value for the company, significant amount of revenue. this puts us in an enviable position. what i mean by that, as those deals near expiration, we have an opportunity to weigh whether it makes sense for us either to extend deals with third parties under licensing circumstances, enabling them to invest their capital but throw off licensing revenue to us, or whether to vertically integrate, whether to both produce and to distribute this product on our own. and we'll make those decisions as they come up. but there's no question that there are deals in place already. they, by the way, were fully factored into our valuation of marvel when we decided to make this deal. we're obviously well aware and spend a fair amount of time focusing on those deals of exactly what they provide us in terms of opportunity and what they'll provide us in terms of revenue. and we feel that they're fully
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factored into the equation. and we have all kinds of great opportunities, even with those deals in place. >> great. thank you so much for joining us. bob iger, ceo, disney. erin, back to you. >> thanks very much. and next? >> the word on the street and the buzz beyond. >> "squawk on the street" coming right back. we will have a lower open. you'll find out how much lower in a moment.
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let's check out the futures for you. down 680, which means open on the dow of minus 67, 70 points.
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>> let's get the buzz from beyond the big board as we get ready for the open. joining us from jersey city, peter kenny, managing director of knight equity. we have two deals. was it the fourth biggest ever for disney and energy deal with bj. which tells a better tale or more accurate tale of where the market is going? confidence in deals or the sell-off? >> great question. i think right now the market mood for the week is going to be, a, volume is going to be light. b, trend is in the holding pattern. it didn't do much to support the overall market. tremendous back of real participation on the part of institutions. we'll see more of the same this week. but i think the real headline news for the week is going to be the jobless numbers on friday. in terms of the disney news, that's a big deal. it's a very positive for the space, positive for the sector. i do think it gives the bettina
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of a positive tone to the market today. we're opening lower, principally because overseas markets were lower over -- closed lower going into today's trading session. >> all right, peter kenny, thank you so much. appreciate it. gave it all, boom, boom, boom. it is a busy week for data. you've got the end of the week, talking comps, central bank decisions. >> and, of course, the jobs number on friday which is always the mother of all data, or at least has been for a while. >> it's this weird thing because labor day is this weekend. everybody thinks that it's still summer. unfortunately, as you can feel a little bit in the weather and with the data flow, it is september tomorrow. i'm sorry, mark. i'm just telling you, you know, i know you can hand the truth. >> it's still summer. it's still summer. >> today it is still summer.
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let me see here, 30 seconds. and the futures are pointing to 60, 70-point drop on the dow at the opening bell. where's oil? oil is down 2 bucks. >> pretty amazing. >> you know, but we're at $95.44. we're up 3,000 points since march. so, you know, let's not panic if we do, in fact, have a correction. >> right. >> you know. >> here at the big board, the cast from the musical. and the united states tennis association. >> market reporters are standing by. let's get straight to them. we're obviously not fully open yet. get ing there. down 52.
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scott? >> yeah, erin, the floor is the placing to this morning on merger monday. marvel entertainment does trade. you heard about the deal. disney, about $4 billion for this company. bob iger appearing first on cnbc to talk about the particular of that deal. marvel is going to open significantly higher, about 25% or so. we're going to make our way over here as well because baker hughes and bj services also trade at post-number four. baker hughes is buying bj services for $5.5 billion. cash and stock deal, about 16% premium there. we're going to stay here because aig is here and i'm going to get to that in a second. the financials by and large were looking weak there morning. they had a big run-up. best performing sector in the month of august. dick bobay putting out a warning this morning. near term, he said, is going to be a bit of an issue. morgan stanley was downgraded today to neutral from buy. aig was down 10%.
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biggest volume mover, at least before the disney/marvel merger. barron's calling it over priced. the stock had a big run. we spoke about it on cnbc last week, a huge story. stock has gone from $13 to $50 in the month of august. that gives you an idea of the run-up. speaking of run-ups, how about the likes that we've seen from fannie and freddie. they si there's no fundamental value in companies and recent run-up has been due to peck lags which it says is unlikely. these stocks are each up about 200% or better in the month of august alone. how about august? best august for dow and s&p for 2,000. up about 4%. the nasdaq was a lagger here but still higher by 2%. small cap stocks doing especially well. russell 2,000 was up better than 4%. that's a busy monday. the final trading day in the month of august. i'll send it to matt nesto at the nasdaq. >> thanks very much. i'll let you judge for yourself
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if this is good. 5% month to month gin from july june to july, global chip sales. step back, year and year figure. down 18%. sugar coating that and saying it's been down 25% on average so far this year. the market pretty much almost everything not working here today. look at intel, for example, down 1%. marvell technologies, not the other marvel which is gone this morning, down half a percent. both big leaders. applied materials in the semiconductor. one of the chinese stocks is weaker here today. remember earlier i said china sunergj was working. it's now succumb to the selling there. it's down 2.8% today. there is an up great to out perform from in line securities. and jetblue is worth a peek. it has been raised to at buy.
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they think that this $5, almost $6 stock is headed for $8 per share. want to buy an airline? jetblue might be the one for you. e-trade was higher. weaker down today. pretty much in line with the market. the largest shfd citadel terminated a deal with them. the best interest of, well, themselves and all shareholders. let's get to bertha now down at the nymex. >> basically had a lot of hurricane activity lately, but none of that has really impacted the energy producing market. and that's part of the reason that we're seeing a sell-off here. not much momentum. obviously the chinese sell-off is what prompted the sell-off in oil. below $70 a barrel. and france also, seeing pressure there. there's not much activity in london because of the fact that it is a bank holiday there. we're going to get to that  september gas and heating oil futures today. we're now trading october
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natural gas and the -- really the momentum in natural gas has been to the downside. cftc says the short exposure there continues to increase. and we're also seeing natural gas this morning. a fresh seven-year low. below $3 of btu. on the back of the fact that, again, we don't have much demand with regard to oil and weather and no threat with regard to weather. let's move on over to chicago. rick santelli. >> thank you, bertha. this interesting. half hour ago we had the 30-year bonds yield. it was elevated by three basis points and the whole rest of the current credit through tens was unchanged. well, now that we're unchanged in the 30, can you guess what the rest of the you curb is? down three basis points. everything shifted. we see rates a bit lower. why? one good reason is the dow is down 70 points. another good reason is we've all talked about china and everybody is trying to put a nice positive spin on it. the fact of the matter is it's
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the first monthly decrease in their stock market for '09. mark haines, back to you. >> thank you. the markets are opening lower. we expected that. sell-off in asia started it. chinese stock lost almost 7% overnight 20,% for the month. joining us on the cnbc edge in philadelphia, senior vp portfolio manager, advisers asset management, and in reno, nevada, tossing their dice, u.s. market strategist at cantor fitzgerald. mark got up earlier than the rest of us. mark, where do you think we're headed now, correction time? >> no, when we use the word correction we mean something more than 7% or 10%. i don't think we're going to see that. i know septembers are typically bad. get a lot of tax loss selling for funds that use the fiscal year for the end of september. but i do think that the performance of the market, the leadership of the market, the breadth of the market indicates
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that there are buyers at lower levels, wait for a pullback, pray for a pullback. i don't think that term is of correction. >> gene, is that what your charts are telling you? >> pretty much. i would have to go with marc on almost all counts. the formation since last september is similar to the formations that developed in the bottom of 2002. these are durable trends. so certainly a pullback of this nature even something a bit more significant, i think, the market will take it in stride. it would be very constructive. i think there's a lot of brace for september because historically it's not a good month. sell in may go away didn't work so well. i'm not sure that september is going to be the evil month that some expect. >> gene, what's priced in in terms of consumers? and by that i mean not just what they're spending at retailers but also about housing. i mean, if the housing market continues to be down double dinlg jipts even though it improves month by month, can the market still go up? >> i think so, erin. i think that this market
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certainly the formations that we're seeing here are indicative of some sustainability and not just a passing knee-jerk reaction kind of event. so the bottom that we're seeing in the housing stock, certainly in the financials, the consumer stocks have been among the early leader since the october bottom. i view october as bottom technically but i won't go into too much detail on that. i think these are standing trends. now the fact that we have begun to see some pretty good news in these areas, and yet these groups continue to hold their gains, i think indicates that there's still better news to follow. >> marc, what about the two deals that we had this morning. i mean, i don't know how much you want to read into it. but disney, for example, has a lot of cash on their balance sheet and they're using it, right, 60% of the deal is going to be paid in cash. we're going to start to see a lot of companies that have cash start to spend it and start to see real deals, that they're trying to take advantage of the stocks before they surge. >> i think you will. i think you will in technology,
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especially, because shears an area where you do need to consolidate and there's a lot of talent out there. there's a lot of business out there that is accretive. i do believe that you're going to see a lot more of that. everybody has been waiting for the bottom. that includes corporations. looking for opportunities that will mesh well with their business, they can expand and take advantage of. but definitely, they have really come out shining. they've cut their expenses exgresive. intel is upping their numbers and their profit margin. i do think we're going to see consolidation in that industry. >> gene, you like tech, too, right? >> i do like technology. i like energy, health care. i still like a lot of manufacturing areas as well. >> you like health care, marc. do you think health care is over? >> i don't want to say over. i think it's probably no more than a market weighter or underweight because it's had such a great run. typically at this stage, you see the defensive stocks sort of
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take a backseat to the more aggressive, more risk, and also more economically sensitive stocks in the turn of the economy. so the retail, like in september retail is typically a good buy through the end of the year. i think we've got a good play there. >> retail, haven't you heard the consumer is dead? >> the consumer not dead. wait a minute. wait a minute. they bought cash for clunkers. they're buying new homes. who cares if it's tax incentive. they got money to spend. >> gene, how do you feel about retail? >> i do like the retailers still. there are a lot of different retailers, whether it's the -- the department stores or the textile, apparel, some of the home improvement. most of those sectors look very good. i would, you know, say it's certainly over the near term they could pull back here a bit. i think that presents a longer term buying opportunity. >> gene, marc, thanks so both. >> two bulls. >> thank you. >> two bulls. both like retail. >> spending back in the retailers again, is your family? >> never stopped.
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>> never stopped. >> no. >> feel an obligation. >> your patriotic duty. up next, "because you clicked," rim, looks like a bunch of you watched our cnbc original documentary fastest growing companies six 2009 and are no thirsty on the info on the blackberry maker. we'll get it for you from the analyst at citi, because you clicked. >> i can barely move my thumb. i have real pain all the time now. plus, darren rovell joins us live from the u.s. open from the ceo at the cable xanl. can the channel make the break? we'll be back. if you're taking 8 extra-strength tylenol... a day on the days that you have arthritis pain, you could end up taking 4 times the number... of pills compared to aleve. choose aleve and you could start taking fewer pills. just 2 aleve have the strength...
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because cyou clicked. joining us the jim with citi group. glad to have you with us. i'm holding up my blackberry here, which ask the bold. i love this thing but it's truly destroying my thumb. maybe ten years down the road that is going to be an issue they're going to have. it is a serious one. do you think the stock is going to keep going up? >> great to see you again. we do see the stock keep going up. the consumer is still spending because smart phones, seeing a lot of subsidies from the carriers, are being priced down pretty competitively. $199, $99, $49, even free. free is a great price. and everybody wants to be smart. smart is moving to the mainstream purchasing power of the wallet right now. and everybody wants to be smart. we think rim is going to continue to work. >> what about this whole can it continue to work as a stock even as the iphone rose in popularity and also, let's just say, apple
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keeps going up? are these two in a dead battle or can they both succeed? >> it's very important to note, the iphone and blackberry each represent about 3% of the total market. so because each of them are so small, we think there's opportunity for both of them to be successful at the same time. we know in many parts of the world, such as in north america if you to use a iphone you have to go exclues ufly to certain carriers like at and t. certain parts of the nation that may or may not work for a person. we think that apple as well app blackberry can be successful. in total, that's only 5% of the market. >> 5% of the smart phone market or the total phone market? >> great question, mark. about 5% of the total market they represent, and of the smart phone market overall, about 17% of the world's market phones represented by smart phones.
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>> okay. i think i'm getting lost in all of this. but, you know, regardless, sales growth, 30% to 40%. not too shabby given the state of the economy. >> you're right. we're in a recession. and for a company that's still growing 30% to 40%, that's very impressive. we expect that to continue and potentially accelerate when the company is going to launch a new product in the second half of this year that will be even more appealing to some of the mainstream consumers. >> what can they possibly do next? >> well, to be honest, their internet surfing as both you and erin use their back berrys a lot. it's been below the standard for what consumers have wanted. they're focussing a lot on the internet ability as well as they're spending more efforts on the touch phones which have been not received overly well because most people like the full keyboard buttons. they're working on those areas to go out to the consumer. and on the enterprise side, they've got a new software
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system that will allow me to log in and access all my files through my corporate firewall. that's very powerful. >> is -- are netbooks a threat here from one end of the market? >> you know, the decision on how that will play out has yet to be seen. it's awfully difficult to see how something can cold up a netbook to their face and make a telephone phone call. >> agreed. but you mentioned people like the keyboard and it occurred to me maybe some people would like the netbook instead of the phone. >> definitely we're seeing convergence and they're going to meet somewhere in the middle. i definitely see the smart phones are becoming more and more powerful. the notebooks need to come down in price point more and more. the lines are indeed getting more and more blurry. >> thanks so much. mark? you have a regular phone. >> i still have my old clunker, cracked crystal and everything.
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>> they should have that, cash for cell clunkers. >> i wouldn't do it. >> watch. >> i don't want a phone that is smarter than i am. i want a phone that rings and i can pick it up and say hello. >> when you feel like it. >> and an occasional text message because that's the only way my kids communicate. third avenue funds, launching the first fund in five years. look at the capitalized on the spike in diss stress atress andg companies. ceo david barst is going to join us first on cnbc.
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good morning. happy monday. i have your "squawk on the street" realtime flash. big merger like disney and marvel gets us looking at the competition. is there a ripple effect? here's time warner with disney and the whole market down, time warner is taking a bit of a hit today. may have something to do as well with what pressure might come on companies like time warner. activision, the video game
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maker. that may or may not have anything to do with the merger but more likely a positive mention in barron's over the weekend. the stock is flat. up early on but has given that up. merger between bakers hughes and bj services puts that on the oil companies. what they gain in convene yens, they could lose in leverage. no help from all season long from con suffer shsumption. look at sonoko cannot buy or break, it's down again today. but we can buy gasoline cheap. >> thank you. you may have seen this headline crossing below. the purchasing managers index out of chicago closely watched is out and, mark, it came in at an even 50 versus last month's 43.4. and an even 50 would put the economy exactly where we know it to be, and that's seesaw, 50 is, of course, a demarkation between
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an economy which is glowing and one that is shrinking. there we are, mark, sitting on the seesaw. the current market environment is a tricky one. even still, third avenue management is launching a new fund this morning. as mark said, it is their first new fund in five years. so why now? what will the fund do and ho what are they going to be buying? perhaps that's the biggest question. joining us at the new york stock exchange, david barse. good to see you again. >> good to see you. >> what will this fund be doing? maybe it's a good time buzz you're dealing with debt and not even debt that necessarily has a rating. >> that's correct. we're going to be a focused credit fund. we're going to invest in many different securities, not only high-yield bonds but loans, convertible notes, bank debt, whatever we can focus our attention on where we think there's value. >> how big will the fund be and how many people? >> it's an open-end fund. and so it's going to start up with some c capital by ourselves
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and then we're going to let the investors come to us. >> how are they going to know you're there? >> hopefully some feel watched this show. >> oh, there's that, mark. >> we -- third avenue, as you know, mark, has been in business over 23 years. we have four existing mutual funds in the marketplace today. all of which have a representation for being deep value, security pickers. >> agreed. >> that's how we're going to attract business. >> this strikes me as a little on the esoteric side to the average investment? >> esoteric, interesting, different, fundamentally sound. same principles of research and deep dive work on individual securities that we do with our equity funds. so it's a for a third avenue investor. >> how much -- how much turnover are your expected? i mean, you mention somewhat most people would -- what retail investment consider exotic
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stuff, forget that first question. >> okay. >> how much liquidity are you looking for in the stuff you're going to buy? >> well, clearly, there are liquidity issues when you buy what we'll call distressed securities. >> right. >> right if but if you're doing skid security selectiinvestment decisions. our investors are long-term. clearly what's happened in the high-yield market over the last three months has been an incredible run. that's more the reason why third avenue is an interesting option for people because we're looking at individual securities and we're hoping to buy from maturity and let the return, if you will, on that investment come from that individual security. not from a market. >> you're going to buy the maturity. >> all of our investment decisions, most of our investment decision will be from a buy to a maturity determination. >> that would suggest not a lot
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of turnover. >> that's correct. to our first question, we do not anticipate a lot of turnover. >> what sort of expense ratio? >> two classes of shares. retail share class and institutional share class. we're going to cap out the expense ratio for the institutional share class at less than 100 basis points. >> one thing i thought was interesting was why you see there's opportunity now. a lot of it comes from -- a lot of people were hypothetically doing this analysis which is making it harder to make money. now it's easier because the other investment is out of business and people are laid off that do this research. >> that's created an opportunity of itself because there isn't as many followed credits as there used to be. they have wound down a bit. there isn't that much out there being followed which gives an individual investor an opportunity to focus closer on a credit, learn a little bit more. i think we're early. we're in maybe the fourth inning op a recovery and there's lots of interesting opportunities out there to buy and to buy. and the maturity schedules for a lot of these credit instruments,
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as you know, it's the largest market we've seen in 20 years. maturity schedules really go out three, four, five years. you've got a lot of debt that comes due at either is an interesting opportunity or a structuring opportunity, a capital infusion opportunity. certainly a lot of things to do in the next few years. and that's why we're doing it now. >> a little inflation, nothing worse than that and deflation when you've got how many trillions of dollars? all right. thanks. >> thank you, david. >> thank you for being with us. >> thank you. grab your goloshe zerks. there's another foreclosure coming but it's not what you think. >> havoc is rippling through the market place yet again. we are down about 98. and the dropoff we saw really droubling the losses when that chicago purchasing manager at 50 crossed.
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capital of the world, in the heart of lower manhattan, it's the second hour of "squawk on the street." good morning again. i'm mark haines. markets are significantly lower. kind of got rocked here on that data which wasn't that bad. i don't get it. >> what we know, right? >> right. anyway, caterpillar leading the dow to the downside. bj services, one of only a handful, up, up about 7% because baker hughes is moving to acquire them. total price, $5.5 billion. just one stock hitting a 52-week high this morning. amerisource bergen. >> health care. >> health care distributor. >> right. >> don't they -- yeah, i remember. so used to joke about cardinal amerisore bergen. >> right, right. all right. let's get down to scott wapner. we did sell off there on that pmi. >> a bit of a leg lower.
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the market has come off that down about 97 or so. the market was already poised with a negative biased if you will, over what we saw in china. down almost 7%. that stock market, the shanghai composite is down about 10% or so over the past three days. got weakness today and commodity stocks, some of the metals, specifically oil is lower today, technology is a weak spot as well. but how about that merger news we got out today, almost $10 billion worth of deals. the headline is disney buying marvel enterprises for $4 billion. about 50 bucks a share. baker hughes buying bj services for about $5.5 billion in a cash and stock deal. it's a 16% premium there. i mentioned how financial stocks were weaker today. a noted analyst put out another note today talking about the banks and forecasting strong earnings growth between 2011 and 2015 talked about weakness, though, in the near terms. some of the financials are weak today. fannie and freddie there.
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aig was the biggest volume mover today. at least in early trading. aig, fannie and fraed freddie if you talk about the overall stock market in the month of august, those are three of the biggest performances and certainly i guess you could say the head scratchers over this past month or so. let's send it up to the nasdaq and matt nesto where i mentioned the technology shares are weaker today. >> it's interesting. if you step back and closing out august, remember, the nasdaq is only up 2 1/2% or was up 2 1/2% going into the session. whereas the list of stocks are up 4%. we don't have as much cushion. we could see this five-month winning streak get snapped. our hope for a six-month streak could end here today. we're down 1 1/2%. intel is holding up better than expected. it's a relative world, folks. interestingly, liberty media, the best stock in august, the worst today in the nasdaq 100. 96 out of 100 stocks in the nasdaq 100, trading lower here today. dreamworks, three letters, actually nasdaq listed is at a
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two-year high today. just pennies away from a five-year high. it's a play on marvel entertainment. and the stock is up over 5% on the news. j.a. solar and china southern energy both weaker as we pretty much discount everything that has even a whiff of china in it. e-trade has 120 million-share put if you will, lifted off from over its head at citadel, largest shareholder. and jetblue higher on an upgrade this morning to buy at steeple. let's get to bertha at the nymex. >> thanks very much, matt. the china syndrome may be the theme of the day. we did see oil selling off beginning in the asian session on that pullback in chinese stocks and shanghai. another thing traders are talking about is a report out of china that state regulators will allow chinese-owned entities to back out of losing derivative trades. they apparently sent letters to
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investment banks, this is in a chinese report, a chinese magazine. traders in asia were talking about it today and traders here today are saying that may be part of the reason that people are very reticent to bye them. that will send a negative precedent if that comes to pass. the only outlye rerks here is a shaw garr high. 28 a year, as folks get richer, they get that sweet tooth. >> the sugar buzz, mohammed el erian's famous phrase. if you look at the data for the august chicago purchasing managers survey, it is so interesting. we all know it's right at the boundary line of 50. and that is an 11-month high. but there were three other components over 50, production and new orders. when was the last time they were over 50? one year ago exactly. 12 months. august of '08. but t. last component above 50,
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supplier of 50. this is as recently as february and at various points over the last couple of years. indeed was it the best level in 13 months? so the rate of change issue is alive and well in this report because the year over year components don't look as good. but the change these days, at least the change we're beginning, is very important. dollar losing significant round of sales against the dollar/yen. look at this chart. mark haines, back to you. >> thank you, rick santelli. steve liesman sitting down with william dudley. another exclusive interview. and steve, i've seen all sorts of headlines that have crossed about your interview. what do you think the most important thing he said was? >> i'm going to bring you another important thing. this is probably stuff that hos not been picked up in the headlines yet. from more on our exclusive interview. the first one ever done on camera by a new york fed president. in this segment we're going to listen to his ideas for how to fix the banking system to avoid
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the next crisis. very important stuff here. >> we need to have conversation policies that basically align the interest of the bond trade we're the interest of the taxpayer. another thing we need to do is think harder about the capital. conservation of capital. one thing that upset me during the crisis, frankly, is the fact that banks continued to pay out dividends, continued to buy back shares to show that they were strong. when, in fact, they were actually dissipating their capital that we actually need so that banks could continue to make loans. i think we need to think harder about regulatory regime where, you know, the bank stock price plumb metss and the banks aren't doing well, the dividend gets shut off automatically. there's no question, no discretion in terms of i get to pay the dividend to show that i'm strong. the dividends stop. it would have been really good if starting late 2007, if the banks had conserved more of their capital. >> what about the other idea i heard which is debt to equity?
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>> i'm interested in this idea of contingent capital. a lot of people talk about we need to raise the capital requirements for banks and we probably need to to a degree. probably less so in the united states than in some other countries where the capital ratios are quite a bit lower. when you raise the capital requirements there are two consequences that aren't so positive. one, you threaten to push that business outside the banking system into the unregulated seconder. two, the second thing you do is you increase the cost of the banks to do business. so the spread between loans and deposits gets wider. the cost of intermediation goes up p the contingent capital idea goes like this. banks during good times don't need much capital because people are happy to do business with banks. banks are making lots of money. they need more capital during bad times. why not let the banks issue debt obligations that are convertible into equity capital if the stock price of the bank plummets. it's sort of a convertible on
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the downside rather than the upside. the value of this would be imagine how this would work during the stock crisis. it plummets and it converts to equity. >> so if this was using any wall street economist it would be interesting but not all that important. this is the president of the new york fed. musing on the issue of dividends automatically cutting off with the drop of a stock price and automatic conversion of debt into equity in the event of a crisis in the banking system. mark, not idle thoughts. i would look for some motion on these in terms of regulatory authorities. maybe in coming months. >> thank you, steve liesman. chicago pmi accelerated to sell-off that was tipped off from asia. how is this last day of august going to set us up for september? joining us from the floor now, alan valdes and in charlotte, john lynch, chief market analyst at evergreen investments. john lynch, i'll start with you. what's going on here in the
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market today? >> hey, mark, good morning. you know, we haven't had the dog days of summer since the first week in july. so i think, you know, with what happened in china and some of the concern about some of the new york fed chairman's comments that could be, you know, kind of a one-two punch for the market from a dividend uptick or downtick, i'm not so sure i'm too fond of that. i do feel strongly about the contingent can't tall rules or proposal. that's something they're wrestling with right now. we had a great run for seven or eight weeks. maybe the next couple of days we're due for a smaller pullback. the technicals look magnificent. >> alan valdes, i know that you know that september historically is the worst month of the year when you steak all of septembers in history. are we setting up for another bad one? >> i don't think so this time, mark. i'll tell you why. a lot of guys, a lot of money managers have missed this 3,000 point rally here. we're getting towards the end of the year. we've got a big option
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expiration at the end of september. these guys have to get involved, not because they want it. they have to. last week we saw $2.2 billion come into the market. you're going to see it continue. these guys have to make money. that money is just sitting in cash paying 1% while they missed a 3,000-point rally in the market. i think you're going to see money keep continuing to come into the market until the end of the year. >> john lynch, that make sense to you? >> i think that makes a good point. when i talked about the technicals and alan talked about the fund flows coming into the market. we held it and it's low volume since we reached 1015 on the s&p 500. but i think we're going to be another low volume week this week. going into september, i'm not sure we're going to have the steady drip of analyst downgrade like prior septembers. so the absence of that, plus the technical strength, i think we could push toward 1015 on the s&p 500. >> if year going to get a liq d liquidity burst here, what part of the market do you think it's going to go into? >> the financials had been hot
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whether short koring or not. the trend is your friend. i think we stay with financials and you stay with health care. health care is going to benefit from the obama administration going forward. and essentially in a recession. stay with health care and financials. >> john lynch, what parts of the market do you like best? >> i still like alan's point about the health care area. i think investors need to appreciate the fact that if we're not going to be hiring extensively it's a productivity gain. we need to really pay attention to what intel has to say on friday and kind of hold on to that for the next couple or three months. >> john lynch, alan valdes, thank you. >> thank you. up next, banks sitting on a ton of foreclosed properties. now, all those properties are about to flood the market. how is this going to affect the recovery? we'll talk about it. then, the hotel index up 40% this year. but the holiday weekend just days away. is it time to check into the hotel stock? and later, a new generation of entrepreneurs. it's not who you think. i'm racing cross country in this small sidecar,
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banks have been holding on to their foreclosed properties for quite some time now. but they're getting ready to flood the market with them. diana olick examines whether it could derail a potential recovery. >> that's right, mark. there's been a caveat that foreclosures could either slow or halt the recovery process. there is a new wave of
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foreclosures coming. if you take a look at the current buck ketd of loet of lo foreclosure, that's the smaller bucket, as you see. if you look at the loans on foreclosure being held by banks or slowed by various moritoria, that's a bigger bucket that is still growing. >> there's simply more loans that are experiencing trouble than are being, a, modified, and, b, pushed into that foreclosure process. >> what's more troublesome is take a look at newer vintage loans, jumbo prime that were made after the so-called housing boom year. just 12 months into these loans, they are defaulting at many, many times a faster rate than average. >> even after the tightening of underwriting criteria, these higher-quality loans that had been created over the past year are running into trouble at a
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much faster rate and the same loans that were created years ago. >> all right. so what about all the modification programs? those are working fine on the cases where the loan itself was actually the problem, like this subprime loan. but the loans that are defaulting now are due to job losses. when you have no income, there is simply no modification for which you will qualify. for more, of course, go to the blog, realtycheck.cnbc.com. mark? >> thank you, diana. with labor day weekend around the corner we're shining a spotlight on the hotel sector. almost 40% this year, s&p index. down 16% though over the last 12 months. is it time to check in? joining us from arlington, virginia, patrick skoels, hotel and lodging analyst, fdr capital markets. patrick, time to buy the hotel stocks? >> it's time to buy some of them. what we've noticed are in the last several months have definitely been trends seeming
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to get less worse. we've noticed in the transient side of the business, which is a combination of individual business travelers and leisure travelers, certainly things are getting less worse at an accelerating rate. additionally, we've also seen stabilization in the group side of the business. again, these are certainly positive for the underlying fundamentals of the stock. now, as far as actually the stocks themselves, you know, the stock, most of the stocks have had a very strong run-up since early july. and when i think about the group, you know, i think about the marriotts and the starwoods. i would advice investors to wait for a little bit of a pullback on those stocks. the valuations look pretty full. however, i have two names that i think are still good values at these levels. they're going to be intercontinental hotels and choice hotels. and historically, these stocks have actually traded at premium marriott and starwood.
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however, right now they're trading at a nice valuation discount. >> maybe there's a real good reason for that discount. >> well, one of the concerns certainly let's talk about price hotels. there's concern that they're not going to quite have the earnings growth that a marriott or starwood. i disagree with that. i think that this company is going to benefit from what we call convergence into their system. essentially those are going to be competitors, franchise properties that will subsequently come into the choice brand. that's very high revenue streams. i don't think people are quite expecting how strong that's going to be. i think they're going to have better revenue growth from that that people are expecting. >> patrick, i just want to make sure i understand. it sounds like what you're picking is sort of two picks on different ends of the -- well, let's just say, affordability metric here. intercontinental naturally high end. is it choice, is it on the lower end? >> choice is considered more mid-scale in economy. they get about 60% of their business from the mid-scale
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comfort inn and then about 40% from the economy segment. however, intercontinental hotels, the title of the company is a little bit of a misnomer. they're actually the holiday inn, holiday inn express, and crowne plaza. actually the intercontinental brand is only about 15% to 20% of their business. >> you call here is more on the mid level in terms of the consumer that you're talking about? >> well, it's that, but it's also a combination of the valuation of these stocks compared to marriott and starwood right now. >> all right. patrick scholes, thanks very much. >> you're welcome. thank you. mark, if we can get a ship that makes you comfortable, you'll sail and stay in a hotel somewhere. still to come, shares of weight watchers have gained 60% since the hainsz bes bottom. the ceo weighs in on this.
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first, double fault zero out of the u.s. open which gets under way. i know that there's no way you have double fault. only infrequently, right, darren? >> sometimes, sometimes when i can't hit that 100-mile-per-hour serve, erin. we're going have the story of the tennis channel and how they're using the u.s. open to get into more homes. their ceo will join us next on "squawk on the street." um bill-- why is dick butkus here? i hired him to speak. a lot of fortune 500 companies use him. but-- i'm your only employee. we're gonna start using fedex to ship globally-- that means billions of potential customers. we're gonna be huge. good morning! you know business is a lot like football... i just don't understand... i'm sorry dick butkus. (announcer) we understand. you want to grow internationally. fedex express
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u.s. open begins today. tennis channel is hoping the coverage ents will help boost its bottom line. darren rovell is live with a special guest. hello, darren. >> reporter: erin, yes, the tennis channel launched six years ago. in 40 minutes it's the first time they'll have live coverage of the u.s. open. joining us right now is ken, the chairman and ceo of the tennis channel. i've got to start with the cablevision question as people in this area well know, there's been a back and forth, the
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national ncpc, what is that, the national cable -- >> television co-op. >> there you go. says there's a deal for you to be in 3 million homes on cablevision as of right now. is it going to be on cablevision in 40 minutes? why or why not? >> darren, we just got a call from andy murray and he wants you on tennis channel right away because of your wicked backhand. i don't know about that. i guess you guys were playing this morning. we do in the have a deal right now. it's unfortunate. but we're hoping that we can find a way to get one in the future with cablevision. >> reporter: they say they have a deal through that nctc. >> it's a great compliment for us that cablevision suggested that. we both want to strike a deal. but our goal is to make sure that tennis, most elasticity sized sport in the world, is able to be seen by a broad range of people. the deal they suggested would limit it to 3% of their
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videoers. we just think that that's not right for the u.s. open. and 3/4 of a million people. >> reporter: the spost sports tier and basic tier. let's talk a little bit about the tennis channel. 25 million homes. but for this week, the previews of getting up to 55 million homes, what's the key for you to grow this? you've invested over one had been million reportedly in the last three years. what's the key to growing this subscriber base? >> well, it's been growing pretty precipitously. we were in 3 1/2 million homes four years ago, 55 for the slams, at least a few of them, the french and the u.s. open, about 35 for the other two. the key really is nothing other than putting on great programming. tennis is a sport that has broad appeal. and when you put it on and program it well with great announcers like jimmy conners and ted robinson, justin, all of these folks, and you program it ale, 52 weeks a year so people know where to find it, the demand goes through the roof. we were doing huge ratings for
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the french and really for right through wimbledon and all the tournaments in between. and we expect giant ratings coming into the u.s. open. so i think once the demand is there, people want it and the rest is kind of takes care of itself. >> reporter: this is the last slam that you've got, which is kind of ironic because you're based here. how important was getting the u.s. open? >> the u.s. open is definitely the crowned jewel. and yet at the same time we built a pyramid underneath that where tennis is unique because it's a 52-week a year sport played all over the world by hundreds of individual competitors. we get to tell their stories each week. right above the scoreboard with 128 men and 128 women's names on it. we tell those stories all year long. being able to kind of bring it all together here at the u.s. open is -- it's indescribable how important that is. we're thrilled we're doing it in high definition and we're doing it around the clock. i think that's one of the big paradigm shifts. having the shelf space to do the
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sport justice. no matter if you watch everything that was on prior, you would still only see a fraction of the matches that were played. we're making sure we're putting them all on around the clock. when we're done here at 11:00 at night eastern we start on the west coast and we go right through from tonight -- u.s. open tonight right up until the open until 10:59 in the morning when it's exclusive balls up on the tennis channel. >> reporter: the state of the game by most accounts is that it's great, especially the men's game, may be the best ever. you broadcast 70 tournaments. the fact that you can have the marketability there if nadal is not in it you'll have roddick or you'll have federer. how does that help your channel? >> it's tremendous. it's classic portfolio management. if we were talking about your business stuff, first of all, you have the mens and women's game. you cannot underestimate the fact that tennis is the only sport where women are as powerful or paid as much and are as big a stars as the machine. so whenever the men are big and
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the women, you've got that balance there. and within the game you have hundreds of personalities, numerous personalities. i'll be rooting for them all, whether it's federer, nadal, andy roddick, andy murray, all of the way down the list, the great up and comers, that's just on the men's side. then you get to the women and, you know, it's just a fantastic game. we're thrilled to be bringing it to the u.s. audience and will be for a long, long time. >> reporter: thanks for joining us this morning, ken solomon, chairman and ceo of the tennis channel. 72 hours of live coverage. erin, back to you. >> all right, thanks very much. clearly, he loves the game. all right. up next, shares of weight watchers up more than 60% from 2345 march low. we'll talk to the ceo about the stock's run, health care reform and his company's new charitable program. we will r. down just about 90 points. holding within that range that we struck after the chicago
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in the headlines, at half past the hour, markets off the lows of the session. pretty close to it though. down just about 93. marvel entertainment hitting a one-year high on the news of one of the two big acquisitions of the day. disney buying the company for $4 billion in cash and stock. most of it in stock. got a balance sheet, your can buy. bj services to the plus side
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other story, up 7%. baker hughes buying the oil services firm, $5.5 billion. there is some cash in that one, too, mark. let's look at the markets and the internals. as erin mentioned, pretty much the lows of the session. the dow doing best, down 1%. nasdaq and s&p down 1% plus. internally, big board, yeah. >> oh. >> 6-1, negative. volume -- >> pretty ugly. >> volume is even worse. that's about 9-1 negative. nasdaq, about 3.5-1 negative. doesn't matter which way you slice it, we're not looking too good. roughly two-thirds of americans overweight or obese. more than a billion people worldwide don't have access to adequate and nutritious food. weight watchers international kicking off the second annual lose for good campaign aimed at
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fighting two global epidemics, obesity and ironically side by side with a hunger problem. joining us more on the campaign, what you can do to help, first on cnbc david kirchoff. thanks for being with us. >> good morning. >> i think that's strange that we have these two problems coexisting, hunger on the one hand, obesity on the other. >> it is. and they don't really have anything to do with each other, except for the fact that obesity tends to be an of flick shun of of flew i understan of affluenc. our lifestyle changes and the shift goes from malnutrition and disease to chronic disease like diabetes. at the same time, for people where there is no affluence, poverty. >> you can help with both. you can help with the obesity. >> we did it last year. >> we know because of what your business is. how can you help with hunger?
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>> this is exactly how it works. last year for the first time a boost for good, what we asked our members to do, for each pound of weight they lost, so they can visualize their weight loss, it's motivating to see ten pounds. we asked them to collect that much nonperishable food over a six-week period of time and then bring it in. and that the food would then be contributed to a local community food bank. they blew by any expectations we had. our -- we had over 2,000 volunteer food drives. we collected 1.5 million pounds of food. weight watchers gave $1 million to two organizations for the benefit of childhood hunger. >> that's actually a creative idea, the way you say it. interesting studies have come out over the past few weeks and people talking about the issue with obesity and just overweightness in america. >> right. >> but one really stuck out to me. by 2015, 75% of american adults, 3/4 of them will be overweight or obese. that's a shocking number.
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and the numbers show we spend, what, $1500 more on each of those people per year than a normal weight person. it's just daunting to look at it that way. can we get through this? can we change that number? >> yes. >> is it too hard? >> no, you can. i wish there was a silver bullet. there's not. but i think that if we take a systemic approach to dealing with obesity, you -- you're not going to get there by running a public service dam pa vivice ca. it's not enough. you need to give incentive to change, tools to change, you need to, you know, create an environment where it's easier to make healthier choices. >> how many companies are working with you? cleveland clinic, for example, there are some companies that offer their employees to go on weight watchers. i'm sure there's other. one option. and in order to encourage that. incentivize a lifestyle change. >> 12% of our company in the u.s. is weight watchers meetings on the worksite. so that's always been a big part
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of our business. and i think it's only going to increase because, to your point, i mean, anybody with self-insured plan, large employers, they're bearing the brunt. this sort of a difference you see, 40% swing in cost between someone who is ebees versus someone in a healthy weight range, is real. >> all right. how's business? >> business is fine. you know, through the second quarter, we talked about the fact that particularly in the u.s., i mean, we felt the effect of the economy with consumer discretionary spend, like everybody else. we're still focusing on the things that we're focusing on in terms of what we need to do to take our business to the next level. you know, we continue to look at the fact that, you know, look at the health care debate and look at all the discussion on bending the cost curve. but if you want to bend the cost curve you have to make an impact on chronic condition. want to have an impact on chronic condition, you have to have an impact on lifestyle. that's what we do.
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>> no question preventive measures are probably the best way to bring costs under control. >> long term and medium term. >> david, thanks very much. >> thank you. >> weight watchers international. coming up, think 20 somethings lead the pack when it comes to entrepreneurship? think again. >> we'll tell you which generation may be leading a new entrepreneurial boom. the answer might surprise you, mark. >> it wouldn't surprise me. i'm too old. nothing surprises me.
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♪ staying alive ♪ staying alive >> michael bloomberg on why new york city is well positioned for an economic recovery, in his view he is run for re-election. and a pair of real estate
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experts on housing and whether we have an issue in commercial real estate or not. >> we forecasted 200,000 job losses. in fact, we've only had about 96,000 job losses. so has not gone down as far as we had thought. i still think that compared to other cities, new york is such a unique place that we will recover quicker than other places. >> we're seeing more activity since the beginning of the year. as a matter of fact, july throughout the whole marketplace there was positive absorption for the fist time in over a year. >> if i look at my old model, i would have said ten years ago, these upswing is impressive but, you know, we're still in a down market. we have to wait and see. >> all right. -- >> it's all about economic data. after this whole week. that's all right. >> sorry. >> and we're going to talk about what's being heard on k street because it is a crucial week for
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the economy and all central banks and the finance minister all meeting. so it isn't just data. it's politically infused data. >> don't go away. ♪ well i was sr a new car, ♪
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♪ which one's me - a cool convertible or an suv? ♪ ♪ too bad i didn't know my credit was whack ♪ ♪ 'cause now i'm driving off the lot in a used sub-compact. ♪ ♪ f-r-e-e, that spells free credit report dot com, baby. ♪ ♪ saw their ads on my tv ♪ thought about going but was too lazy ♪ ♪ now instead of looking fly and rollin' phat ♪ ♪ my legs are sticking to the vinyl ♪ ♪ and my posse's getting laughed at. ♪ ♪ f-r-e-e, that spells free- credit report dot com, baby. ♪
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welcome back. i'm trish regan. coming up at the top of the hour, only on "the call" we're going to talk about going from what is a tremendously bullish month, august, into what is traditionally an historically a bearish month, what do you need to be doing right now as investors? do you need to put money on the sidelines or is there still opportunity to get in? two market strategists are going to debate that one. and we're going to look at immigration reform and whether or not that has the potential to actually derail health care. that's coming up in today's "call of the wild." and a crisis appears to be looming for the pharmaceutical stri in its effort to bring new drugs to the market. we're going to discuss what you could call the placebo effect. it's all coming up only on "the call" at the top of the hour. but first, scott cohn with a realtime flash. >> hey, trish. looking at asia with a big change in government in japan and one of the winners here is
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nippon telephone and telegraph which is up strongly today, apparently perhaps from relief, certainly now about what's going to go on with the government in japan. but on the flip side, china mass media, china stocks under pressure. a lot of talk about the quality of the roifr there. and china mass media reporting a big sequential drop in revenues today. that stock is getting clobbered today. have you noticed back in this country "martha stewart living" a big jump in the last month? if you bought this stock a month ago when the company missed its estimates at last quarter earnings, you're doing well because the stock has more than doubled in the last month and it is up again today very strongly. erin, back to you. big week for data watchers on wall street. key indicators on deck. unemployment, car sales. i didn't mention that because we had so many others, central bank, home sales, construction, purchasing managers, ism,
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there's a lot more. joining us with what's being heard on k street, jon hilsenrath. then you've got the finance ministers. >> erin, maybe we should call it gooek week because we have so many. >> maybe we should. certainly it is proof that we're back to school, shall we say, in the markets. >> yes. take out those pencils, start sharpening them. >> what do you think is the most important? >> i think it's the unemployment rate. you know, it ticked down a notch in july. the forecast is that it's going to tick back up. i think we have to start asking ourselves somewhat ifs. what if it doesn't tick back up or what it even falls. there's a big debate right now about how soon the fed is going to tighten it. the expectation is it isn't going to be until well into next year. in part, because it never tightens until after the unemployment rate has peaked. what if we're about to see the peak? friday is a really big market day. and we have to look -- a lot of
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people are going to be looking at payrolls. i'm going to look at jobless rates to see what happens. >> what about the retailers? that's another thing, i didn't mention it. but we're going to get the best back to school we can on thursday when they're all coming out with the same store. >> right. the big retail story for august is car retailers, right, because of cash for clunkers. i think it's more of a mixed picture. early parts of the month for retailers, like costco, target and such, was that it wasn't all that exciting. some of the later data that came in suggested maybe it was a little on the firm side. it's going to be the cash for t clunkers, auto sales that really drives retail for the month and could give us a little pop on the consumer front. we've been having this debate for a while now. it's probably just pulling in some consumer spending that would have happened later in the year anyway. >> aren't people just going to -- they'll kind of bah humbug that, right? >> exactly. the other thing, i think that the -- the consumer is an
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important part of this. it's really the manufacturing sector we have to watch right now. the ism index, an index of manufacturing activity, is very close to 50. which is a real turning point number. it's the point that suggests if it's expanding or contracting. and we might be at a point where we can say the manufacturing sector is expanding again. that's going to be the first leg of a recovery if we're in one and if we get one. it's going to be driven by production by manufacturers as they work on -- after having worked up all this inventory. >> if we're going to have a jobless recovery as most pundits seem to think we are, shouldn't with stop paying so much attention to the jobs report? >> well, you know, that's assuming we're going to have a jobless recovery. you know, it's possible, when you think about what happened, we had a huge shock to the economy a year ago with lehman brothers. business reacted by whacking millions of worker. it's possible they're going to bring some of them back and we might get the illusion of a
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v-shaped recovery that later down the road dissipates or disappear. we could see a pop in the jobs picture. it's going to create some confusion about where we stand in this outlook. i think the surprise is for this month they're possibly on the upside. >> thank you. >> okay. thanks a lot, guys. up next, we could be on the verge of a new sentrepreneurial boom. >> we're down 68. we'll be back. carol, when you replaced casual friday with nordic tuesday,
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we're back, and it's true that some of the biggest and the best businesses, they were started during recessions. this time around not young 20-somethings starting brave new ventures. it's baby boomers. geezers. old folks. >> baby boomers are not old. >> the ones we're going to kill under obama care. they're the ones who are doing it. >> let me make sure we clarify here. mark is kidding. >> sarah palin told me so. carl smith just came out with a
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report on the so-called boomer effect, and the teacher of entrepreneurship and business plan development at the ucla anderson school of management. thank you both for joining us. carl, it's the old folks, huh? >> well, i'm not sure we're going to call them the old folks. the kaufmann foundation shows from 55 to 64. i don't look at that group as old. but they are showing the highest rate of business formation over the last few years. >> maybe it's out of desperation. they're getting laid off. >> there's no doubt that that's true. but if that's the case, these are people with enormous kills. in that population you see a huge number of engineers who've been displaced, who go out of their company. they have very, very good ideas. and this is their chance. they don't have anything else to do. to start a company. >> here's the question, though. how many of them are successful?
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how many of them at least are able to make -- i'm not talking about becoming bill gates. but at least are able to make a living? >> well, it's surprising. even in recessions. that the rate of success or, conversely, the rate of failure is virtually consistent over five decades. so the formation of a business in terms of its potential failure is not affected by the current economic conditions in any significant way. >> that's a pretty amazing statistic. professor, mentioning engineers as an example. where are we really seeing this? are we really seeing a totally different sort of business starting up? >> well, yes. engineers and medical people are certainly very active starting new businesses. but low-tech businesses also benefit from this baby boomer
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effect that he was referring to. at ucla we have a course in entrepreneurial start-ups. that's one of the most popular class that we have for our employed mba people. so they come to school here with about 13 years of work experience in our fully employed mba program. they come from a variety of backgrounds. not just high-tech. it's their intent when they come to ucla and other schools which have mid-year programs to start companies when they get their mbss. >> wait a minute. they get an mba first? >> yeah. >> and then they go -- and then they get their brain sticks for the sbe preneural class? >> no. the entrepreneurial class is part of the mba program. it's one of our most popular electives. in fact, that's one of the reason why they come to our school and other schools as well. >> can i get a degree in
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entrepreneurialism -- >> agony is a tough word there, mark. we think all of it's pretty useful. in fact, the entrepreneurial elective is useful in that it's the -- it's the course that integrates what you've learned in the core curriculum. it's the place where you put together the marketing and accounting and hr and apply it to a specific situation. >> carl, quickly before we go, 40% of new businesses in california over the past decade started by non-american citizens. that's something we see across the country, that it is immigrants? >> for decades. decades and decades. immigration is central to our growth. and if it was up to me, every time a foreign kid graduates from an american university, he's declared a citizen on the spot. >> that's not a bad idea. >> yeah. that would do it. >> but certainly if you -- if you look at history, you're absolutely right. it is the immigrant class, and i don't mean that in a -- they're
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the ones that drive the formation of new business, restaurants. >> they have the fire. >> absolutely. one thing we shouldn't lose is we're all descendants of the immigrant class. >> we've got to go. >> what are you, american-indian now? mark's an american-indian. marvel entertainment shares are up on news that walt disney will buy the company. bj service up 8% on news that competitor baker hughes will buy it. also a cash and stock deal. the chicago purchasing managers index improved to 50 for august up from 43.4 last month. the cnbc.com news now, we're first in business worldwide. i'm courtney reagan. good morning and welcome to "the call." everyone on this monday morning, the final trading day of the month. here we are on august 31st as we head into september, what is
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typically a very tough month for the markets, the question is where do you need to be? can that rally we saw in august continue? we have two people on to debate it today. larry? >> larry kudlow. a nightmare for the pharmaceutical industry. the placebo effect may be getting stronger, and drug makers are desperate to find out why. details on the big pharma crisis. an explosive health care debate you're not hearing about. it could derail reform moving forward. we'll discuss the impact of immigration on health care reform. this is "the call" on cnbc. stocks opening lower on this final trading day in august. the chicago pmi report showing little impact despite a strong rise in midwest business activity, climbing to its highest level since last september. contagion seems to be

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